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Greece’s Deadlocked Debt Talks Unnerve Investors

Yield on some Greek debt soars

Investors are dumping Greek bonds, fearing that Athens will be unable to pay debt that comes due this summer.

The selloff comes as the Greek government is again at a standstill in negotiations with its creditors in the eurozone and at the International Monetary Fund. Athens needs to break the deadlock and secure more aid before about €6 billion ($6.46 billion) in debt has to be repaid in July.

Complicating matters is the scheduled IMF board meeting next week and a lack of clarity over what position the U.S.--which has the largest vote at the fund—will take under the Trump administration.

The yield on one piece of Greece’s July debt owed to private creditors has more than doubled in the past few days to more than 15%, according to Tradeweb data, from less than 6% last week, a level that even then was consistent with a highly risky security. The rising yield—rising bond yields mean falling prices—is a sign that investors view a much higher probability of default.

The trigger-happy nature of investors in the Greek bond market has intensified the selloff. “A big part of trading volume in the Greek market comes from active accounts that follow the news flow,” said Argyrios Gkonis, an analyst at Axia Ventures.

The deadlock over Greece’s debt is familiar.

The IMF says Greece’s debt is too high for it to receive more aid in the form of loans. Eurozone creditors, led by Germany, won’t commit to major debt relief. Greece itself is resistant to more budget cuts. Germany says it won’t continue to help Greece without the IMF alongside.

The atmosphere worsened after a statement on Tuesday by a member of parliament from the ruling Syriza party that a debate over Greece membership in the euro shouldn’t be a taboo. Quitting the euro would likely lead to substantial losses for holders of euro-denominated Greek debt.

“I believe there has to be a political and national discussion the likes of which hasn't taken place during the last seven years,” said Nikos Xydakis, a former minister in the Syriza government, though he later clarified his comments by restating his support for Greece’s eurozone membership.

Still, his comments followed reports on German media earlier this week that suggested the German government is warming to the idea of Greece abandoning the euro, the so-called Grexit.

Tension around Greece’s financial position has been building for some time. Ratings firm Moody’s Investors Service said in December that a delay in closing the review of Greece’s bailout program “increases the risks that repayments to bondholders due in July 2017 may be missed.” The bailout review is pending.

“Greece doesn’t have the liquidity [to repay the bond], so it will need financing from the program,” said Axia Venture’s Mr. Gkonis.

European officials are scheduled to meet next week, and if no headway in negotiations is made then, talks could stall until after the Dutch elections, Deutsche Bank said in a note to investors this week. Voters in the Netherlands are scheduled to go to the polls on March 15.

Greece and its creditors have run up against deadlines many times in the seven year bailout, and bond yields have soared and sunk as negotiations stalled and restarted. Greece defaulted once on private creditors, in 2012.

Facebook is working on a video-focused app aimed at set-top boxes including Apple TV (and different entirely from its existing offering on Roku, which is essentially a variation on its current mobile app), according to a new report from the Wall Street Journal. The plans focus on helping turn Facebook’s wellspring of video content into a destination on a platform that’s almost exclusively aimed at delivering video, in a bid to help it better tap into budgets that are currently going towards traditional TV advertising.

The report also reiterates claims we’ve seen before that Facebook is looking to license quality original video content, similar to how Netflix and Amazon will often pick up the exclusive rights to shows for distribution on their own platforms. That would be a big draw for a dedicated video app, and help bring in audiences that might not necessarily join in if all that was available was user-generated content. Premium content means more premium ad dollars, too, which according to this report does seem to be the goal for Facebook with this endeavor.

It also sounds like there would be opportunity here for Facebook to use this as a means to further its ambitions as a live video source, since users could broadcast to the TV app. Twitter uses its own Apple TV app as an endpoint for its live programming experiments in partnership with media companies and sports leagues, so this could indeed prove fruitful in helping it expand that part of its video strategy, too.

Of course, this would also make Facebook look even more like a media company than it already does, which would put renewed energy into the debate around its responsibilities there and general role in disseminating information. But YouTube is already well on its way to being a broad replacement for traditional cable and satellite video delivery, so it would make sense for Facebook to press on with its own efforts to stake out some of that territory, and a dedicated app for set-top boxes including Apple TV and Android TV devices would be a relatively low-cost way to do that.

We reached out to Facebook, but they had not responded as of publication time.

"In this way, we are taking advantage of the opportunities offered by electric mobility and are significantly limiting the required investment," Mercedes-Benz Cars production chief Markus Schaefer said on Wednesday.

Daimler has said its Mercedes-Benz and Smart brands planned to launch more than 10 electric cars by 2025, with zero-emission vehicles accounting for 15 to 25 percent of Mercedes sales.

It has already said that it would build the first model under its new EQ electric vehicle brand in the northern German city of Bremen, and on Wednesday it made Sindelfingen the second plant designated to join the electric cars push.

Daimler plans to invest up to 10 billion euros ($10.8 billion) in the development of electric vehicles, and labor representatives have been pushing for a large part of that investment to be made in the carmaker's home country.

The group said on Wednesday its factories in Germany's Bremen, Rastatt and Sindelfingen as well as its Smart model plant in Hambach, France, would be competence centers for its electric vehicle production.

Labor representatives welcomed the move as it gives existing German plants a stake in the shift to electric vehicles.

"It must be clear that the jobs are safe despite all the challenges," works council chief Michael Brecht said.

Daimler has agreed to keep on 125 temporary workers at its Sindelfingen plant, its biggest German factory with 25,000 workers, for another year and make it a center for car electronics.

In return, workers' representatives have agreed to discuss more flexible working hours.

EQT Bids for European Car Park Operator Q-Park

Q-Park expects proliferation of self-driving cars and increasing urbanization will increase demand for its services

EQT Holdings AB, a private equity firm founded by Sweden’s billionaire Wallenberg family, is among bidders for Q-Park NV, one of Europe’s largest car park operators, according to people familiar with the situation.

Q-Park has more than 835,000 parking spaces and 2,500 employees from the U.K. to Belgium. The Netherlands based company had €809 million ($868 million) of sales and earned a net profit of €90.9 million for 2015, after reporting a loss the previous year. It is owned by a group of mainly Dutch insurance companies and pension funds. The shareholders have started a sale process, Sacha Oerlemans, a Q-Park spokeswoman, said in an interview.

J.P. Morgan Chase & Co. is advising on the sale. If the sale process is successful, Q-Park would be among the largest European private equity deals in 2017, bankers working on the transaction said.

Q-Park expects that the proliferation of self-driving cars and increasing urbanization will increase demand for its services. “We anticipate that our parking facilities can form an essential and practical part of autonomous mobility,” the company said in its annual report for 2015. It anticipates a “completely self-driving ecosystem” by 2050.

Private-equity firms use a combination of their own funds and bank loans to buy companies. They try to boost sales and profits before selling companies on, typically within five years, aiming to earn a multiple of the equity they invested. EQT was founded in 1994 and has raised €31 billion to invest in companies. EQT’s past investments include Thule Group, a maker of rooftop boxes for cars, and European hotel chain Scandic.

Private equity firms have had mixed success with European car park operators. 3i Group Plc and Cinven Ltd., both London-based private equity firms, made profits from investments in the U.K.’s National Car Parks. French private equity firm Eurazeo struggled with its €885 million acquisition of German parking company Apcoa in 2007. Lenders later took control of Apcoa after the company struggled with its debts.

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